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July 15, 2016 Practice Points

Corporate Officer Liability under the FDCA

By Jessica B. Beringer

In U.S. v. DeCoster, the Eighth Circuit affirmed the three-month prison sentences of the Quality Egg of New England, LLC, owner, Austin "Jack" DeCoster, and chief operating officer, Peter DeCoster, both of whom pled guilty to misdemeanor violations of the Food Drug and Cosmetic Act (FDCA) in connection with Quality Egg's sale of eggs into interstate commerce that, unbeknownst to anyone at the company, were infected with salmonella. Nos. 15-1890, 15-1891, slip op. at 2, 10 (8th Cir. July 6, 2016). In affirming the sentences, the court concluded that the record showed that the DeCosters were liable for "negligently failing to prevent [a] salmonella outbreak" affecting approximately 56,000 Americans under the responsible corporate officer concept of the FDCA, which does not require that defendants know that they violated the FDCA "to be subject to [its] statutory penalties." Id. at 9–10.

Under the FDCA "responsible corporate officer concept, individuals who 'by reason of their position in the corporation have the responsibility and authority' to take necessary measures to prevent or remedy violations of the FDCA and fail to do so, may be held criminally liable as 'responsible corporate agents,' regardless of whether they were aware of or intended to cause the violation." Id. at 6–7 (emphasis added) (quoting U.S. v Park, 421 U.S. 658, 673–74 (1975)). The Eighth Circuit concluded that under this responsible corporate officer concept, although the district court determined that the record did not show that the DeCosters, or anyone else at Quality Egg, actually knew the company was selling contaminated eggs, the DeCosters could be sent to prison under the FDCA's penalty provisions as a result of their failure to do more to prevent egg contamination. The court held the sentences were appropriate in light of their "familiarity with the conditions . . . [of their] facilities" and their authority to conduct additional testing of eggs and implement "preventative measures to reduce the presence of salmonella." Id. at 4, 8–9.

This decision underscores not only the importance of companies having updated, well-documented, and well-executed food safety and bio-security plans, but ensuring that corporate officers are kept up to date and take appropriate action. Specifically, companies should:

  • Ensure that their food safety and bio-security plans are up to date and include appropriate protections against contamination.
  • Ensure that such plans are actually implemented. Companies should have quality control mechanisms to ensure that food safety and bio-security plans are implemented. These mechanisms should include a process for keeping higher-level executives with the power to enact necessary change informed of the successes and risks of the measures taken to prevent contamination.
  • Carefully document efforts to implement the food safety and bio-security plans. The appropriate corporate officers should be apprised of these efforts and should take action if the plans are not executed as intended.
  • After an incident of contamination occurs at one facility, a company should evaluate whether responsive measures taken at that particular facility should be implemented in other facilities. While there may be reasons not to implement the same precautions across multiple facilities in multiple locations, the decision not to or to do so may be at issue in future litigation. The company (and the relevant corporate officers) should be prepared to explain the decision to act or not act.

While this list of tips is not exhaustive, it can serve as a starting point for companies looking to reevaluate their food safety and bio-security plans to avoid corporate officer liability.

Keywords: products liability, litigation, Quality Egg LLC, DeCoster, salmonella

Jessica B. Beringer is with Sidley Austin LLP in Chicago, Illinois.

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